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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ---------- to ----------
Commission File Number 0-27316
MOLECULAR DEVICES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 94-2914362
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1311 Orleans Drive
Sunnyvale, California 94089
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(408) 747-1700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
As of August 9, 1996 8,908,560 shares of the Registrant's Common Stock were
outstanding.
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<PAGE>
MOLECULAR DEVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1996 and December 31, 1995 ................. 2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended June 30, 1996 and 1995 ... 3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1996 and 1995 ............. 4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS .......................................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ................. 7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS ................................... 11
ITEM 2. CHANGES IN SECURITIES ............................... 11
ITEM 3. DEFAULTS ON SENIOR SECURITIES ....................... 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS ............................................. 11
ITEM 5. OTHER INFORMATION ................................... 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .................... 11
SIGNATURE ................................................................ 12
1
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
<TABLE>
MOLECULAR DEVICES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>
DECEMBER 31,
JUNE 30, 1996 1995
------------- ----
(UNAUDITED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents ........................................ $ 20,705 $ 20,379
Accounts receivable, net ......................................... 5,218 3,987
Inventories ...................................................... 1,859 1,393
Deferred tax assets .............................................. 1,572 1,161
Other current assets ............................................. 75 141
-------- --------
Total current assets ........................................ 29,429 27,061
Equipment and leasehold improvements, net: ......................... 1,478 1,588
Other assets: ...................................................... 303 151
-------- --------
$ 31,210 $ 28,800
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable ................................................. $ 1,440 $ 932
Accrued liabilities .............................................. 3,457 2,791
Deferred revenue ................................................. 487 476
Current obligations under credit arrangements .................... 42 76
Promissory notes ................................................. 1,500 --
-------- --------
Total current liabilities ................................... 6,926 4,275
Stockholders' equity:
Preferred stock, no par value; 3,000,000 authorized;
no shares outstanding ......................................... -- --
Common stock, $.001 par value; 30,000,000 shares
authorized; 8,904,535 and 8,687,791 shares issued and
outstanding at June 30, 1996 and December 31, 1995,
respectively .................................................. 9 8
Additional paid-in capital ....................................... 36,910 35,159
Accumulated deficit .............................................. (12,149) (10,100)
Deferred compensation ............................................ (469) (537)
Accumulated translation adjustment ............................... (17) (5)
-------- --------
Total stockholders' equity .................................. 24,284 24,525
-------- --------
$ 31,210 $ 28,800
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
2
<PAGE>
<TABLE>
MOLECULAR DEVICES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<CAPTION>
THREE MONTHS SIX MONTHS ENDED
ENDED JUNE 30, JUNE 30,
---------------------- ---------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Product revenues .................................... $ 7,532 $ 5,987 $ 13,537 $ 11,059
Contract revenues ................................... 115 550 212 1,488
-------- -------- -------- --------
Total revenues ................................. 7,647 6,537 13,749 12,547
-------- -------- -------- --------
COST OF REVENUES:
Cost of product revenues ............................ 2,801 2,141 4,997 3,992
Cost of contract revenues ........................... 58 470 105 1,246
-------- -------- -------- --------
Total cost of revenues ......................... 2,859 2,611 5,102 5,238
-------- -------- -------- --------
Gross margin ................................... 4,788 3,926 8,647 7,309
-------- -------- -------- --------
OPERATING EXPENSES:
Company-funded research and development ............. 1,236 978 2,265 1,827
Charge for acquired in-process research
and development and acquisition related
costs ............................................ 4,637 -- 4,637 --
Selling, general and administrative ................. 2,433 2,154 4,534 4,155
-------- -------- -------- --------
Total operating expenses ....................... 8,306 3,132 11,436 5,982
-------- -------- -------- --------
Income (loss) from operations ............................ (3,518) 794 (2,789) 1,327
Other income (expense), net .............................. 259 (9) 524 (42)
-------- -------- -------- --------
Income (loss) before income taxes ........................ (3,259) 785 (2,265) 1,285
Income tax benefit ....................................... 116 295 216 482
-------- -------- -------- --------
NET INCOME (LOSS) ........................................ $ (3,143) $ 1,080 $ (2,049) $ 1,767
======== ======== ======== ========
NET INCOME (LOSS) PER SHARE .............................. $ (0.36) $ 0.15 $ (0.23) $ 0.24
======== ======== ======== ========
SHARES USED IN COMPUTING NET INCOME
(LOSS) PER SHARE ...................................... 8,754 7,380 8,724 7,380
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
MOLECULAR DEVICES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .............................................................. $ (2,050) $ 1,767
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization ............................................. 302 268
Loss on disposal of fixed assets .......................................... 32 --
Charge for acquired in-process research and development ................... 4,427 --
Amortization of deferred compensation ..................................... 68 --
(Increase) decrease in assets:
Accounts receivable .................................................. (982) 159
Inventories .......................................................... (206) (56)
Deferred tax asset ................................................... (412) (514)
Other current assets ................................................. 66 40
Increase (decrease) in liabilities:
Accounts payable ..................................................... 423 (127)
Accrued liabilities .................................................. 26 163
Deferred revenue ..................................................... 11 56
-------- --------
Net cash provided by operating activities ...................................... 1,705 1,756
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ........................................................... (219) (220)
Acquisition of NovelTech Systems, Inc., net of cash on hand .................... (1,198) --
Other assets ................................................................... (2) 19
-------- --------
Net cash used in investing activities .......................................... (1,419) (201)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on credit arrangements .............................................. (34) (199)
Issuance of common stock, net .................................................. 85 4
-------- --------
Net cash provided by (used in) financing activities ............................ 51 (195)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH: ....................................... (11) (20)
-------- --------
Net increase in cash and cash equivalents ...................................... 326 1,340
Cash and cash equivalents at beginning of period ............................... 20,379 2,201
-------- --------
Cash and cash equivalents at end of period ..................................... $ 20,705 $ 3,541
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
4
<PAGE>
MOLECULAR DEVICES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF INTERIM PRESENTATION
The accompanying unaudited condensed consolidated financial statements
included herein have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes the disclosures which are made are adequate to make the
information presented not misleading. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's Annual Report to
Stockholders for the fiscal year ended December 31, 1995.
The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) which
are, in the opinion of management, necessary to state fairly the results for the
periods presented. The results for the three and six month periods ended June
30, 1996 are not necessarily indicative of the results to be expected for the
entire fiscal year ending December 31, 1996.
Certain reclassifications have been made to the financial statements for the
three and six month periods ended June 30, 1995 to conform with the 1996
presentation for those periods.
NET INCOME (LOSS) PER SHARE
Net income per share is computed using the weighted average number of shares
of common stock and dilutive common equivalent shares from stock options (using
the treasury stock method).
NOTE 2. INVENTORIES
Inventories consist of (in thousands):
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
Finished goods ................... $ 527 $ 558
Work in process .................. 673 368
Raw materials and subassemblies .. 659 467
------ ------
$1,859 $1,393
====== ======
NOTE 3. ACQUISITION OF NOVELTECH SYSTEMS, INC.
On June 7, 1996 the Company acquired all of the outstanding stock of
NovelTech Systems, Inc. ("NovelTech") for a cash payment at closing of
$1,500,000, issuance of two promissory notes valued at $750,000 each and
issuance of 146,342 shares of the Company's common stock valued at $1,482,444 as
of the closing date. The promissory notes are due and payable on the later of
January 2, 1997 or upon completion of "Technology Transfer". In the event that
payment is not made on the defined payment date, interest will commence to
accrue from the payment date on the unpaid principal balance at an annual rate
of 2% above prime rate charged by the United States major commercial banks in
effect at that time.
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<PAGE>
The acquisition was accounted for as a purchase and the total purchase price
of 4,692,391, including $209,947 of acquisition related costs, was allocated
based on an independent appraisal as follows:
Excess of liabilities over tangible assets ........ $ (94,389)
Acquired developed technology ..................... 150,000
Acquired in-process technology .................... 4,636,780
-----------
Total purchase price .............................. $ 4,692,391
===========
The purchase price allocation has resulted in a $4,636,780 charge to acquired
in-process technology in the second quarter of 1996. This charge is not
deductible for federal or state tax purposes. The acquired in-process technology
represents the appraised value of technology in the development stage that had
not yet reached economic and technological feasibility and does not have
alternative future uses. In reaching this determination the company considered,
among other factors, the stage of development of each product, the time and
resources needed to complete each product, and expected income and associated
risks. The results of NovelTech are consolidated from June 8, 1996.
Pro forma consolidated results for the Company as if the acquisition had been
consummated January 1, 1996 are as follows (in thousands except per share
amounts):
SIX MONTHS ENDED JUNE 30, 1996
------------------------------
Revenue ................................. $14,502
Net Income .............................. $ 2,449
Net Income per Share .................... $ 0.26
The pro forma information does not purport to be indicative of the results
that actually would have occurred had the acquisition been consummated January
1, 1996 or of results which may occur in the future. In accordance with SEC
Regulation S-X, Rule 11-02(b)(5), nonrecurring charges, such as the charge for
acquired in-process technology resulting from the acquisition, are not reflected
in the pro forma financial summary.
NOTE 4. INCOME TAXES
Income tax benefits of $116,000, $295,000, $216,000 and $482,000 were
recorded for the three and six month periods ended June 30, 1996 and June 30,
1995, respectively. The benefit provisions result primarily from the reduction
of the valuation allowance on net deferred tax assets due to anticipated pretax
income for 1997 and 1996, respectively. Based upon the results of operations
over the last several years, the Company believes that it is more likely than
not it will be able to utilize these benefits.
6
<PAGE>
MOLECULAR DEVICES CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section. Reference is
also made to the factors identified in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 as filed with the Securities and Exchange
Commission.
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in Part
I--Item 1 of this Quarterly Report and the audited consolidated financial
statements and notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations for the year ended December 31,
1995 contained in the Company's 1995 Annual Report to Stockholders. The results
for the three and six month periods ended June 30, 1996 are not necessarily
indicative of the results to be expected for the entire fiscal year ending
December 31, 1996.
OVERVIEW
On June 7, 1996 the Company acquired all of the outstanding stock of
NovelTech Systems, Inc. ("NovelTech"). The purchase price of approximately $4.7
million consisted of a cash payment at closing of $1.5 million, issuance of two
promissory notes valued at $750,000 each, issuance of 146,342 shares of the
Company's common stock valued at approximately $1.48 million, and acquisition
related costs of $210,000.
The second quarter of 1996 included a $4.6 million one-time charge for
acquired in-process technology related to the acquisition of NovelTech. See
"Charge for acquired in-process research and development" below.
RESULTS OF OPERATIONS--THREE AND SIX MONTHS ENDED JUNE 30, 1996.
PRODUCT REVENUES. Product revenues for the second quarter of 1996 increased
26% to approximately $7.5 million from approximately $6.0 million in the second
quarter of 1995. The MAXline and Cytosensor product families showed increased
levels of revenue. MAXline product revenues increased primarily due to sales of
SPECTRAmax products and increased penetration of MAXline products into the
international distribution channels. Cytosensor product revenues increased due
to increased penetration into the international distribution channels and as a
result of the Company's Academic Grant Placement Program. Threshold product
family revenues decreased primarily due to lower shipments to the U.S. Army and
decreased revenues from the sale of Threshold products internationally.
Product revenues for the first six months of 1996 increased 22% to
approximately $13.5 million from approximately $11.1 million in the same period
of 1995. The MAXline and Cytosensor product families showed increased levels of
revenue. MAXline product revenues increased primarily due to sales of SPECTRAmax
products and increased penetration of MAXline products into the international
distribution channels. Cytosensor product revenues increased due to increased
penetration into the international distribution channels and as a result of the
Company's Academic Grant Placement Program. Threshold product family revenues
decreased primarily due to lower shipments to the U.S. Army and decreased
revenues from the sale of Threshold products internationally
CONTRACT REVENUES. Contract revenues for the second quarter of 1996 decreased
by 79% to approximately $115,000 from approximately $550,000 in the second
quarter of 1995. Contract revenues for the first six months of 1996 decreased by
86% to approximately $212,000 from approximately $1.5 million in the same period
of 1995. The reduction in contract revenues for both periods is due primarily to
the substantial completion of the Company's ARPA contract in late 1995.
GROSS MARGIN ON PRODUCT REVENUES. The gross margin on product revenues
declined to 62.8% in the second quarter of 1996 from 64.2% in the second quarter
of 1995 due primarily to increased shipments to
7
<PAGE>
lower margin international and domestic distributors. The gross margin on
product revenues declined to 63.1% in the first six months of 1996 from 63.9% in
the same period of 1995 due primarily to increased shipments to lower margin
international and domestic distributors.
COST OF CONTRACT REVENUES. The cost of contract revenues for the second
quarter of 1996 decreased by 88% to approximately $58,000 from approximately
$470,000 for the second quarter of 1995. The cost of contract revenues for the
first six months of 1996 decreased by 92% to approximately $105,000 from
approximately $1.2 million in the same period of 1995. The reduction in cost of
contract revenues for both periods is in line with the corresponding reduction
in Contract revenues.
COMPANY-FUNDED RESEARCH AND DEVELOPMENT. Company-funded research and
development expenses for the second quarter of 1996 increased by 26% to
approximately $1.2 million (16.4% of total product revenues) from $978,000
(16.3% of total product revenues) for the second quarter of 1995. Company-
funded research and development expenses for the first six months of 1996
increased by 24% to approximately $2.3 million (16.7% of total product revenues)
from $1.8 million (16.5% of total product revenues) for the same period of 1995.
The increased spending for both periods was due to the continued buildup of
research and development capabilities focused on commercial projects independent
of government-funded research projects.
CHARGE FOR ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT. The Company recorded
a one-time charge of approximately $4.6 million during the second quarter of
1996 due to the write-off of acquired in-process research and development
related to the Company's acquisition of NovelTech Systems, Inc. on June 7, 1996.
The acquired in-process technology represents the appraised value of technology
in the development stage that had not yet reached economic and technological
feasibility and does not have alternative future uses. The Company determined
this amount to be in-process research and development and recorded the charge
based on, among other factors, the stage of development of each product
acquired, the time and resources needed to complete product development,
expected income and associated risks. A total of $150,000 of the purchase price
was capitalized as research and development and is being amortized over two
years, the estimated useful life of the acquired technology. See Note 3 of
"Notes to Condensed Consolidated Financial Statements" included in Part I--Item
1.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the second quarter of 1996 increased by 13% to approximately $2.4
million (32.2% of total product revenues) from $2.2 million (36% of total
product revenues) for the second quarter of 1995. Selling, general and
administrative expenses for the first six months of 1996 increased by 9.1% to
approximately $4.5 million (33.5% of total product revenues) from $4.2 million
(37.6% of total product revenues) for the same period of 1995. The increased
spending for both periods is primarily the result of additional spending on
marketing and sales related activities as the Company continues to expand market
coverage.
OTHER INCOME (EXPENSE), NET. Net other income for the second quarter of 1996
was approximately $259,000 as compared to net other expenses of $9,000 for the
second quarter of 1995. Net other income for the first six months of 1996 was
approximately $524,000 as compared to net other expense of approximately $42,000
for the same period of 1995. The increased other income for both periods relates
primarily to interest income earned on the proceeds of the Company's initial
public offering completed in December 1995. In addition, interest expense
decreased as the proceeds of the offering were used to repay certain
interest-bearing debt instruments in December 1995.
PROVISIONS FOR TAXES. Income tax benefits of $116,000, $295,000, $216,000 and
$482,000 were recorded for the three and six month periods ended June 30, 1996
and June 30, 1995, respectively, relating primarily to a reduced valuation
allowance on the Company's net deferred tax assets. The income tax benefits have
the effect of increasing earnings for both periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $20.7 million at June 30, 1996.
In addition, the Company generated $1.7 million and $51,000 from operating and
financing activities, respectively, in the first six months of fiscal 1996 as
offset by $ 1.4 million used in investing activities related primarily to the
acquisition of NovelTech and approximately $219,000 of capital spending.
8
<PAGE>
The Company believes that its existing capital resources and cash expected to
be generated from future operations will be sufficient to fund its operations
and anticipated capital expenditures through at least 1997. However, the
Company's future liquidity and capital requirements will depend upon numerous
factors, including the resources the Company devotes to developing,
manufacturing and marketing its products, the extent to which the Company's
products generate market acceptance and demand and other factors. As such, there
can be no assurances that the Company will not require additional financing
within this time frame and, therefore, the Company may in the future seek to
raise additional funds through bank facilities, debt or equity offerings or
other sources of capital. Additional funding may not be available when needed or
on terms acceptable to the Company, which could have a material adverse effect
on the Company's business, financial condition and results of operations.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company's business, financial condition and results of operations are
subject to various risk factors, including those described below and elsewhere
in this report.
o UNCERTAINTY OF FUTURE OPERATING RESULTS. Future operating results will
depend on many factors, including demand for the Company's products, the
levels and timing of government and private sector funding of life sciences
research activities, the timing of the introduction of new products by the
Company or by competing companies, the integration of acquired products and
technology into manufacturing and distribution processes, the Company's
ability to control costs and its ability to attract and retain highly
qualified personnel. Furthermore, the Company's gross margins can be
significantly affected by many factors, including shifts in product mix,
the mix of direct sales as compared with sales through distributors,
competitive price pressures or quarterly fluctuations in sales levels
relative to fixed costs.
o FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; LACK OF BACKLOG. The
Company manufactures its products to forecast rather than to outstanding
orders, and products typically have been shipped within 30 to 60 days of
purchase order receipt. As a result, the Company does not have substantial
backlog, and the amount of backlog at any particular date is generally not
indicative of its future level of sales. The Company's manufacturing
procedures may in certain instances create a risk of excess or inadequate
inventory levels if orders do not match forecasts. The Company's expense
levels are based, in part, on expected future sales. If sales levels in a
particular quarter do not meet expectations, the Company may not be able to
adjust operating expenses sufficiently quickly to compensate for the
shortfall, and the Company's results of operations may be materially
adversely affected. Many of the Company's products are subject to long
customer procurement processes. Accordingly, the timing of capital
equipment purchases by customers is expected to be uneven and difficult to
predict. In addition, a significant portion of the Company's revenues is
typically derived from sales of a small number of relatively high-priced
systems, and sales of such products may increase as a percentage of revenue
in the future. Delays in receipt of anticipated orders of such products
could lead to substantial variability from quarter to quarter. In addition,
the Company has historically made a significant portion of each quarter's
product shipments near the end of the quarter. If that pattern continues,
even short delays in the shipment of products at the end of a quarter could
have a material adverse effect on results of operations for that quarter.
The Company typically experiences a decrease in the level of sales in the
first calendar quarter as compared to the fourth quarter of the preceding
year because of budgetary and capital equipment purchasing patterns in the
life sciences industry. In 1995, the Company also experienced a decrease in
product revenues in the third quarter compared to the second quarter,
related to seasonality primarily associated with lower European and
academic sales during the summer months. The Company expects the third
quarter seasonality trend to continue in future years as the Company
increases its efforts to penetrate international markets. Operating results
in any period should not be considered indicative of the results to be
expected for any future period.
o DEPENDENCY ON NEW PRODUCTS; RAPID TECHNOLOGICAL CHANGE. The life
sciences instrumentation market is characterized by rapid technological
change and frequent new product introductions.
9
<PAGE>
FACTORS THAT MAY AFFECT FUTURE RESULTS (CONTINUED)
The Company's future success will depend on its ability to enhance its
current products and to develop and introduce, on a timely basis, new
products that address the evolving needs of its customers.
o OTHER FACTORS. The Company's business is affected by other factors,
including: (i) the possibility that the introduction or announcement of new
products would render existing products obsolete or result in a delay or
decrease in purchase orders for existing products; (ii) the extent to which
and the timing in which the Company's products achieve market acceptance;
(iii) the capital spending policies of the Company's customers (which
depend on various factors, including the resources available to such
customers, the spending priorities among various types of research
equipment and the policies regarding capital expenditures during
recessionary periods), including those policies of universities, government
research laboratories and other institutions whose funding is dependent on
grants from government agencies; (iv) competition; (v) the Company's
ability to obtain and maintain patent and other intellectual property
protection for its products and technology; (vi) the Company's ability to
obtain in a timely manner certain components used in its products which are
currently obtained from single sources; (vii) compliance with governmental
regulations, including those promulgated by the United States Food and Drug
Administration and similar state and foreign agencies; and (viii) the
extent of the Company's sales outside the United States, which involve
certain specific risks, including risks related to currency fluctuations,
imposition of government controls, export license requirements,
restrictions on export of critical technology, political and economic
instability or conflicts, trade restrictions, changes in tariffs and taxes,
difficulties in staffing and managing international operations and
international distributor relationships, and general economic conditions.
10
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MOLECULAR DEVICES CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not currently a party to any material legal proceedings.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Matters presented and the voting of stockholders were as follows:
(a) Election of directors for the ensuing year
For: 6,401,663 Against: 5,233 Abstain: 0
(b) Ratification of Ernst & Young LLP as the Company's independent auditors
for the fiscal year ending December 31, 1996
For: 6,389,696 Against: 0 Abstain: 17,200
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None.
(b) REPORTS ON FORM 8-K
A Report on Form 8-K dated June 7, 1996 was filed on June 21, 1996. An
amended Report on Form 8-K dated June 7, 1996 was filed on August 13, 1996.
11
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOLECULAR DEVICES CORPORATION
By: Andrew Galligan
-----------------------------------------------
Vice President, Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: August 14, 1996
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1995 AND JUNE 30,
1996, RESPECTIVELY, AND THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE SIX MONTHS ENDED JUNE 30,
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